Abstract —Two common explanations for the dearth of voluntary annuitization are bequest motives and liquidity demand, both of which create implicit costs for each annuitized dollar. Whenever costs prevent full annuitization, we demonstrate that efficient annuity allocations concentrate annuity-funded consumption late in life. This implies traditional immediate payout annuities are inefficient relative to recently introduced delayed payout annuities which have survival-contingent payments beginning years after purchase. For typical examples, a six percent delayed payout allocation has utility comparable to a thirty-nine percent immediate annuity allocation. Since retirees appear averse to large annuity purchases, delayed payout annuities could significantly improve retiree welfare.